P&H rumours: Sainsbury’s to buy?

Sainsbury’s is drawing up plans for a takeover bid of Palmer & Harvey, the UK’s biggest delivered wholesaler and tobacco distributor, according to media reports yesterday.

According to stories published by Sky News and The Telegraph, plans for the bid are ‘understood to be at an early stage’. and are ‘informal.’

Earlier this month reports began to circulate that the wholesaler was to be put up for sale, despite securing a deal from its creditors to shore up its finances; as well as a new three year contract to supply Tesco. Consultant PricewaterhouseCoopers has apparently been hired to supervise the sales process. Earlier this month Imperial Tobacco-owned distribution company Logista was the ‘bookies’ favourite’ as a buyer.

Jonathan Buxton, head of retail at Cavendish Corporate Finance, said a Sainsbury’s purchase would be a ‘defensive move’ by the UK’s second-biggest supermarket in the face of the Tesco-Booker deal.